When you have money, you don’t have to spend it

๐—–๐—ผ๐˜‚๐—น๐—ฑ ๐—ถ๐˜ ๐—ฏ๐—ฒ ๐˜๐—ต๐—ฎ๐˜ ๐˜๐—ต๐—ฒ ๐—น๐—ผ๐—ป๐—ด๐—ฒ๐—ฟ ๐˜†๐—ผ๐˜‚ ๐—ฐ๐—ฎ๐—ป ๐—ต๐—ผ๐—น๐—ฑ ๐—ผ๐—ป๐˜๐—ผ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—บ๐—ผ๐—ป๐—ฒ๐˜†, ๐˜๐—ต๐—ฒ ๐—ฏ๐—ฒ๐˜๐˜๐—ฒ๐—ฟ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ณ๐—ถ๐—ป๐—ฎ๐—ป๐—ฐ๐—ถ๐—ฎ๐—น ๐—ผ๐˜‚๐˜๐—ฐ๐—ผ๐—บ๐—ฒ๐˜€ ๐˜„๐—ถ๐—น๐—น ๐—ฏ๐—ฒ?

โŒ The truth is, when you use money, you lose it โ€” forever.
โœ” When you keep money, you keep it โ€” for however long you want.

Or in other words, if you spend money on things you will end up with things & not the moneyโ—

The ability to delay gratification is a necessity to accumulate wealth.

But one of the hardest tightropes to walk in all of finance is ๐™›๐™ž๐™ฃ๐™™๐™ž๐™ฃ๐™œ ๐™ฉ๐™๐™–๐™ฉ ๐™—๐™–๐™ก๐™–๐™ฃ๐™˜๐™š ๐™—๐™š๐™ฉ๐™ฌ๐™š๐™š๐™ฃ ๐™จ๐™ฅ๐™š๐™ฃ๐™™๐™ž๐™ฃ๐™œ ๐™ข๐™ค๐™ฃ๐™š๐™ฎ ๐™ฃ๐™ค๐™ฌ & ๐™จ๐™–๐™ซ๐™ž๐™ฃ๐™œ ๐™ข๐™ค๐™ฃ๐™š๐™ฎ ๐™›๐™ค๐™ง ๐™ฉ๐™๐™š ๐™›๐™ช๐™ฉ๐™ช๐™ง๐™š.

โฉ Itโ€™s important to save & invest because those savings can provide even more experiences as it compounds. Savings can provide a level of comfort & security so you donโ€™t saddle your future self with unnecessary stress.

โฉ Itโ€™s also important to spend SOME money now on the things you love because time is precious. Thereโ€™s no point in working for a paycheck if you donโ€™t use that money to provide some enjoyment in life.

Do both.

As long as youโ€™re saving some money for the future you should also enjoy the present, agreed?

This notion leads to these questions:
1๏ธโƒฃ How much to spend?
2๏ธโƒฃ What to spend it on?

To find the answers it might help to ๐—ฎ๐˜€๐—ธ ๐˜†๐—ผ๐˜‚๐—ฟ๐˜€๐—ฒ๐—น๐—ณ ๐˜๐—ต๐—ฒ๐˜€๐—ฒ ๐—พ๐˜‚๐—ฒ๐˜€๐˜๐—ถ๐—ผ๐—ป๐˜€ ๐—ณ๐—ถ๐—ฟ๐˜€๐˜ ๐—ฏ๐—ฒ๐—ณ๐—ผ๐—ฟ๐—ฒ ๐—ฎ ๐—ฝ๐˜‚๐—ฟ๐—ฐ๐—ต๐—ฎ๐˜€๐—ฒ:

How will this thing help me flourishโ”
How good will I feel having this next Monday or in 1/3/5 years from nowโ”
Would I take the cash insteadโ”

Hereโ€™s what I mean by the last one. Imagine you have the following choices:
A) You can either have that thing you want for free.
or
B) You can get its exact price in cash.

This tests if the benefits of a purchase outweigh saving money.

Then the ONLY remaining thing you have to do is to ๐—ฎ๐˜ƒ๐—ผ๐—ถ๐—ฑ ๐—–๐—ผ๐—ป๐˜€๐—ฝ๐—ถ๐—ฐ๐˜‚๐—ผ๐˜‚๐˜€ ๐—–๐—ผ๐—ป๐˜€๐˜‚๐—บ๐—ฝ๐˜๐—ถ๐—ผ๐—ป (buying just to say you own it).

Conspicuous Consumption describes that humans love to project status. It makes us feel accomplished & important.

Playing the status game is a highly expensive hobby & your toys all lose value fast.

The underlying problem: buying for status doesnโ€™t provide contentment.

The value decays quickly. If you are looking for happiness, look elsewhere.

Remember, you have a family to feed. Not a community to impress.

Living within your means is a superpower.

โ€œThe quicker you want something, the easier you are to manipulate.โ€ – Shane Parrish

โ€œIโ€™m not real frugal or thrifty, โ€ฆ I just donโ€™t waste money on little things that donโ€™t matter, but spend on big things that do.โ€ โ€” Brian Oโ€™Reilly

โ€œThe record shows that, for society, the richer we become, the harder it is to live within our means. Abundance is harder for us to handle than scarcity.โ€ โ€“ Nassim Taleb

โ€œIf you look at what you have in life, youโ€™ll always have more. If you look at what you donโ€™t have in life, youโ€™ll never have enough.โ€ โ€” Oprah Winfrey,

โ€œEven if youโ€™re filthy rich, live modestly. Wealth makes people jealous. Anyone who has enough cash can buy a luxury yachtโ€”thereโ€™s no skill to that. If youโ€™re a billionaire, itโ€™s more impressive not to buy one, to live modestly.โ€ โ€“ Rolf Dobelli

โ€œAcknowledging the good that you already have in your life is the foundation for all abundance.โ€ – Eckhart Tolle

โ€œIf you live for having it all, what you have is never enough.โ€ – Vicki Robin, Your Money or Your Life

โ€œWhenever Iโ€™m tempted to buy dumb stuff I practice instant gratitude as a replacement for instant gratification. When Iโ€™m grateful I donโ€™t need to try and fill a void in my life with a purchase. Gratitude reminds us of how much we already have so we donโ€™t feel we need to have more.โ€ โ€“ Tim Denning

โ€œWealth is not about having a lot of money. Itโ€™s about having a lot of options.โ€ โ€“ Chris Rock

Bias: Slow down and think. Don't trust your intuitions.

2 Comments

  1. “When you have money, you donโ€™t have to spend it” – an obvious truth, but many people are struggling with this problem. Such people describe the agitating feeling of having money waiting to be spent: “the money burns a hole in my pocket”

    There is a high overlap between the people with holes in their pockets and those prone to conspicuous consumption.

    What is often overlooked is that money saved will tend to earn more money through interest, dividends, distributions and the like, whereas items bought to impress other people have the opposite effect: they tend to burn money in the long run and tie down ones attention.

    The fancy handbags our assistants bought back in the days in Sg had to be handled like precious art pieces, got extra chairs in restaurants and had to be worried and fussed about. Once they got out of style, or became worn out a tiny bit they became a cost and a burden.

    The fancy cars people tend to buy to in order to be stuck in traffic and to struggle to find parking for tend to cost great amounts in depreciation such as maintenance, road taxes and even extra work of scheduling garage appointments, administering paperwork or becoming an involuntary chauffeur to friends and family members who just need to “hop over to Ikea real quick”.

    Lastly, conspicuous spending often triggers the Diderot effect. “Now that I have the BMW, I really cannot be seen living in a condo with such old furniture” … In a way, conspicuous spending can become a vicious cycle of spending driving more spending until the person is underwater. To illustrate the issue: 12% of Singaporeans do not pay their credit cards in full each month.

    There has to be a balance between spending and investing and one does not need to go to frugal extremes – as long as the balance is in favor of saving and not spending, finances and life satisfaction tend to be good.

    Longest comment I ever posted on the internet, got inspired by your post! ๐Ÿ™‚

    • Thank you for your longest comment ever, Singvestor.

      There is so much truth in what you say.

      Having more money than you need is a nice feeling to have, but spending your life working like a slave to pay for stuff you no longer want can be a devastating realization later in life.
      I am convinced thatย thereโ€™s a gapย between what you think your goals are when youโ€™re young and what you wish your goals were when youโ€™re older.

      Having enough comes from the inside. It comes from seeing yourself and your work differently, from knowing that more is not the answer.
      Embrace this mindset and youโ€™ll be richer than any billionaire.
      You may do less, but youโ€™ll have so much more.

      โ€œHe who knows he has enough is rich.โ€ โ€“ Lao Tzu

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